Questions about selling family home

D

Dr.Doctor

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My father recently passed away and didn't leave a will.
As I understand it, the house passes to the next of kin i.e. myself and my sister. We were thinking of our options e.g. refurbishing and renting, but we are leaning more towards selling the house. Refurbishing it might prove costly as there is an awful lot of work to be done in the place. And the added costs/headaches of renting it out an maintaining it afterwards. Selling seems to be the best solution for both of us, but I'm wondering if we will have to pay any taxes on the proceeds. The house is inherited and I'm quite sure it will fall under the €500k threshold for non-taxable inheritance.

Can someone who is more knowledgeable or who has gone through a similar experience care to share? Any major things to beware of like timeframes for doing certain things e.g. deeds being transferred to myself and my sister's names.

Thanks.

Info: Neither myself, nor my sister have lived there for the last 8 years. I have been living abroad while she is still resident in Ireland.
 
You can receive gifts/inheritances of up to about €500k in a lifetime from your parents (if your father died in 2007 the limit was €496k, if in 2008 it is up to 520k). If you are not likely to have reached this limit, you are best to get the house you are part inheriting valued at the higher end of the scale for inheritance tax purposes. The house can be transferred into yours and your sister's names without having to pay stamp duty.

The value you declare it at for inheritance tax purposes is then your base cost for capital gains tax purposes. So, if you sell the property, your CGT liability will be 20% of the difference between the inheritance tax valuation and what you sell it for (less legal fees etc).

Even though you are non-resident in Ireland, you will be subject to CGT on the sale (if it's at a profit) and inheritance tax (if your total gifts/inheritances exceed the threshold). However, you should also get advice on your tax position in your country of residence.
 
apart from any tax implications already mentioned you will have to take out Letters of Administration in order to achieve joint ownership. i would think the major issue is the question of selling now or trying to hold on for a while in the hope the market will pick up. is there anyone in the house now and is it well located. in the present market climate it would be difficult to sell if in need of major renovations. you might end up selling it for a very low figure to perhaps a builder who would repair and perhaps in a year or so sell for a much increased sum. if at all possible would be inclinedto hang on as long as possible. also ensure title deeds are registered in your late fathers name.
 
Thanks for the information folks.
The deeds are in my late father's name alright.

Nige, I'm a bit confused by what you are saying.
"you are best to get the house you are part inheriting valued at the higher end of the scale for inheritance tax purposes"
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Let's say I go and get the house valued and they say it's worth €250k. Then when I sell it it goes for €270k instead. I pay 20% CGT on the €20k? Sorry if I sound a bit ignorant with this, but I've never had to deal with this type of thing before :)
 
Dr.Doctor said:
Let's say I go and get the house valued and they say it's worth €250k. Then when I sell it it goes for €270k instead. I pay 20% CGT on the €20k? Sorry if I sound a bit ignorant with this, but I've never had to deal with this type of thing before :)
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That's it. So the higher the valuation you get for house at the date you become "beneficially entitled" to it (for inheritance tax purposes) the less CGT you'll pay on a later sale.
 
I do not think there is any need to get the house transferred into your names, I think you can just put the house on the market and hopefully sell it and the money received for it would become part of the estate of your late father and you would not have to pay any CGT on it.
 
If we decide to hang onto the house until the housing market picks up again, what recurring costs should we take into account that are involved in keeping a house that is vacant? My sister already wants to get the phone, gas and cable disconnected which just leaves the electricity. Neither of us can really afford, financially or time wise, to see to the upkeep the house as she has her own with her family and I'm abroad.
 
Dr.Doctor said:
If we decide to hang onto the house until the housing market picks up again, what recurring costs should we take into account that are involved in keeping a house that is vacant? My sister already wants to get the phone, gas and cable disconnected which just leaves the electricity. Neither of us can really afford, financially or time wise, to see to the upkeep the house as she has her own with her family and I'm abroad.
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Insurance will be really important. You will need to ensure that it is insured and that the insurance company are aware that the house is vacant.

If the house is old, and will be vacant for a while, maybe leaving it completely unheated is a bad idea. If damp sets in, damage could be caused. Even a damp smell in a house can depress the value when you eventually try to sell.
 
"I do not think there is any need to get the house transferred into your names, I think you can just put the house on the market and hopefully sell it and the money received for it would become part of the estate of your late father and you would not have to pay any CGT on it."

This is incorrect. The poster is referring to an executors\administrators sale. Certainly, the sale of the house can be put through in such a manner, but this does not avoid CGT. If the house is sold for more than the date-of-death value, then the administrator would have to account for CGT.
 
If the posters father died recently the value of the house would be a recent and up to date one and at the moment the price of houses are not rising at the rate they were if it was sold quickly there may not be any increase in the value so therefore no CGT. That was the situation with my mother in law's estate when she died.
I have also had experience of renting out a property and not living in the area and I found it difficult, there seemed to be problems every so often and I had to drive over to sort them out. When we sold the property I was delighted!
 
hi i would recommend selling and moving on espicially if you dont reside in the house.... i have recently inherited my grandparents home with a sister... inherited xmas o7-probate passed oct 07-house on market-jan 08(deeds were not in name)house sold feb o8-working on closing sale now and going our separate ways... really happy its progressed

solicitors fees probate matters-3,000(only for me-there was alot to do)
all and all....
solicitor and auctioneer fees came to 25,00 for the two of us
solicitor took 1%
ea took 1%

but house sold for a mil so the fees are that high.....im not a person with alot of financial knowledge,just expressing my recent experience,apologies if sounds complicated at all x
 
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